Third, reduce the administrative overhead with which employers and insurance companies are burdened. Coburn notes that administration and processing currently account for 6% of health care costs, which may seem small until one realizes that 6% is in the range of $125 billion.
Fourth, reform Medicare and Medicaid. Much like the antiquated systems of Canada and Britain, Medicare and Medicaid are directed by government bureaucrats who decide what services and drugs patients can have, when they can have them and how much the government will pay for them. Consequently, access and care are not the same for those dependent upon Medicare and Medicaid as they are for those on private or employer-sponsored health insurance. It is difficult immediately to eradicate entitlements, like Medicare and Medicaid, once a large number of people are dependent upon them. Perhaps the place to begin is to eliminate overlap between the two programs and to streamline those who are on both into one or the other. In spite of the difficulty, these two must be reformed soon. If left unchanged Medicare and Medicaid are projected to consume 16.2% of the Gross Domestic Product (GDP) in the coming years.
The major problem with health care is that Americans have ceded to the Federal Government a role it should not have, particularly because the United States Constitution does not enumerate health care as a power of the Federal Government. True, government has a responsibility to ensure that there are medical standards in place to prevent abuse, malpractice and corruption but this is better left to state governments.
Health care and education are the two most regulated industries in America, and, consequently, two of the most expensive and staid. If the Federal Government would move out of the health industry and deregulate the market prices would fall, insurance companies would become competitive, taxpayers would save money and the industry would be much more consumer-friendly and responsive. As Scott Harrington and Tom Miller note in “Competitive Markets for Individual Health Insurance,” competition creates relentless pressure for accurate pricing. Ideally, Americans will move away from the false promises of universal health care and toward a free-market system in which competition lowers prices, creates more accountability and stimulates innovation.